An important point is that "capital" is essentially just another way of saying "investment". Investment is what creates opportunities and demand for labor. Strong demand for labor increases wages e.g. construction wages going through the roof because of data center investment.

If you disincentivize investment, economic surplus tends to shift toward rent-seeking behavior which creates relatively little labor demand. Many economies in Europe are poster children for this phenomenon. Ideally you want an economy that strongly incentives investment over rent-seeking.